November 24, 2009
Previously published on November 17, 2009
On 30 October 2009, the European Committee of European Securities Regulators (CESR) published a statement reporting on the results of its analysis of the application of disclosure requirements related to financial instruments in the 2008 financial statements of 96 listed European banks and insurers, including 22 in the FTSE Eurotop index. The analysis deals with the application of the mandatory disclosure requirements of IFRS 7 - Financial Instruments: Disclosures and with additional recommendations and guidance on disclosure.
The results showed that in some areas a significant proportion of European financial companies failed to comply with mandatory disclosure requirements, but CESR also noted that a significant number of companies provided additional disclosures in line with recommendations that were published in late 2008.
Among other issues, the analysis found that around 40% of the companies (10% of the FTSE Eurotop companies) failed to disclose the sensitivity of the fair values recognised in their financial statements to changes in assumptions. The analysis also found that, of those companies that had special purpose entities (SPEs), around 20% failed to disclose details of how they had exercised their judgement on whether the substance of the relationship between the entity and a SPE indicated that the SPE was controlled by that entity. In addition, 20% did not disclose how they had exercised their judgement in deciding when all the significant risks and rewards of ownership of financial assets had been transferred to other entities. This was a larger number than CESR had expected, given that such information is highly relevant for an understanding of the financial statements.
|